We study optimal tax and educational policies in a dynamic private information economy, in which ex-ante heterogeneous individuals make an educational investment early in their life and face a stochastic wage distribution. We characterize labor and education wedges in this setting analytically...

We analyze the effects of the unprecedented rise in trade between Germany and "the East" – China and Eastern Europe – in the period 1988–2008 on German local labor markets. Using detailed administrative data, we exploit the cross-regional variation in initial industry structures and use...

In this paper we show that the recent model by Duranton (AER, 2007) performs remarkably well in replicating the city size distribution of West Germany, much better than the simple rank-size rule known as Zipf’s law. The main mechanism of this theoretical framework is the "churning" of...